Ofgem will allow developers to build long-duration energy storage (LDES) facilities under a new revenue framework, the regulator confirmed last week. The decision follows a consultation that drew responses from National Grid, Octopus Energy, and the Renewable Energy Association. For the typical UK household, the immediate effect is modest, between £15 and £30 added to annual electricity bills from 2026, depending on how many projects proceed. But the signal is clear: the grid is getting more expensive to balance, and those costs will flow through to your meter.
As reported by Dentons, Ofgem’s LDES decision is designed to attract investment in technologies like pumped hydro and compressed air storage. These can store energy for six hours or more, smoothing out the gaps when wind and solar generation drop. But the revenue guarantee model, essentially a contract-for-difference with a floor price, means consumers will underwrite the risk if projects underperform. The heatwave margin notices issued by National Grid in July, which warned of tight supply during record temperatures, underscore why the regulator felt it had to act.
Who pays for storage, and how much
Ofgem estimates the LDES framework will add roughly £1.50 to £2.50 per month to a typical dual-fuel bill from 2026, rising to perhaps £5 per month by 2030 if the full 20 GW pipeline is built. That is not catastrophic, but it compounds other network cost increases already baked into the price cap. National Grid’s electricity system operator (ESO) has also signalled that balancing costs, the fees paid to power stations and batteries to keep the grid stable, will rise by 12% this year, adding another £18 to the average bill. The combined effect is a steady upward drift in the fixed part of your energy costs, regardless of how much power you actually use.
What this means for your EPC and home upgrades
The rising cost of grid services makes every kilowatt-hour you avoid buying more valuable. A typical 3-bed semi with gas heating and an EPC rating of D uses about 12,000 kWh of gas and 2,900 kWh of electricity per year. If network and balancing charges add £50 to the annual bill by 2027, a solar PV system generating 3,500 kWh could save you roughly £200 in avoided electricity purchases plus another £50 in avoided network charges. The Energy Saving Trust estimates that topping up loft insulation from 100mm to 270mm saves about £40 per year on gas, a small but immediate hedge against rising system costs. Heat pumps, which use electricity more efficiently than gas boilers, also reduce exposure to gas network charges, though the upfront cost remains high at £7,000 to £13,000 after the Boiler Upgrade Scheme grant.
The catch: storage is not a silver bullet
Long-duration storage is essential for a net-zero grid, but it is expensive. The LDES framework guarantees developers a minimum price for stored electricity, which means consumers pay the difference if market prices fall below that floor. Ofgem has capped the total consumer exposure at £1.5 billion over the lifetime of the first projects, but that is a large number, roughly £55 per household if fully called upon. Critics, including the energy consultancy Aurora, argue that cheaper alternatives like demand-side response (paying households to shift usage) and interconnectors with Norway and France could deliver similar grid stability at lower cost. Ofgem acknowledges this but says LDES is needed for multi-day storage that interconnectors cannot provide. Homeowners should watch the consultation on the LDES cap design, due in early 2025, which will determine how much of that risk lands on their bills.
What to do now
Check your current energy tariff. If you are on a standard variable rate, you are already paying the full network cost pass-through. A fixed-rate tariff locked in before October 2024 may offer some protection, but most fixes now include a premium for rising grid costs. For long-term resilience, invest in fabric efficiency first, loft insulation, cavity wall fill, and draught-proofing cost £500–£2,000 and improve EPC ratings by one or two bands. Solar PV with a 5 kWh battery can reduce your grid dependence by 60–70% on sunny days, cutting both energy bills and exposure to network cost increases. The Boiler Upgrade Scheme will pay £7,500 towards a heat pump until March 2027, but you must apply before installation. Do not wait for the next price cap announcement, the LDES costs will arrive regardless.
Frequently Asked Questions
No, the cost impact will not appear until 2026 at the earliest, when the first LDES projects begin operating. Ofgem estimates the initial effect at £15–£30 per year on a typical household bill, rising gradually as more storage capacity is built.
Partially. Solar panels and battery storage reduce the amount of electricity you buy from the grid, so you avoid the network charges embedded in each kilowatt-hour. However, the fixed standing charge, which covers some grid balancing costs, will still apply regardless of your generation.
